There was this in today's Age newspaper that may explain the huge short position.....
"If earnings before interest, tax, depreciation and amortisation fall 28 per cent from 2014 levels, Myer would breach debt covenants."
With CEO and CFO leaving 2 weeks before results, it is definately not a good look. Soothing remarks by the chairman about concensus Bloomberg numbers is also not reassuring. A bit of real information that they would have on hand about where sales stand would have calmed matters somewhat, unless the shorters are correct.
This bit.....
"Our disclosure obligations are linked to Bloomberg consensus; that's broadly the benchmark we are using in telling you there is no need for disclosure now," Mr McClintock said." tells me the numbers are worse than expected, but within 15% of what's expected.
Does anyone know what the bloomberg consensus numbers for Myer are?? The article mentioned.....
"Myer has not given any forecast for the full-year profit but is happy enough with analysts' consensus of around $89 million after tax, which would be a decline from the $98.5 million Myer made in 2014."
That's a 9.6% fall. If consensus was out by 10% and it is a 19.6% fall, that is still within guidlines and
starting to sail very close to debt covenant breach, especially if sales continued to fall in the second half. The shorters might be playing a long game here!!
Daytr, you keep mentioning the wonderful dividend. What makes you think there will be one? I think they are betting on it being cut again, and if profit is down, will need every cent not to breach debt covenants later in the year. Cutting dividends now might put lenders at ease or allow for re-negotiation of debt.
(20min delay)